Information Sharing and Spillovers: Evidence from Financial Analysts

Byoung-Hyoun Hwang (), José María Liberti () and Jason Sturgess
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Byoung-Hyoun Hwang: Dyson School of Applied Economics and Management, Cornell SC Johnson College of Business, Cornell University, Ithaca, New York 14853; and Korea University Business School, Korea University, Anam-dong, Seongbuk-gu, Seoul 136-701, Korea
José María Liberti: Kellogg School of Management, Northwestern University, Evanston, Illinois 60208; and Kellstadt Graduate School of Business, DePaul University, Chicago, Illinois 60604

Management Science, 2019, vol. 65, issue 8, 3624-3636

Abstract: We study how information sharing within an organization affects individual performance. We look at situations in which the same analyst, while working at the same broker, covers multiple mergers and acquisitions (M&As), in particular the acquirer prior to the M&A and the merged firm thereafter. We find that earnings forecasts for the merged firm are significantly more accurate when the analyst has a colleague (working at the same broker) covering the target prior to the M&A. This holds particularly true if acquirer analysts and target analysts reside in the same locale, if they are part of a smaller team, and if the target analyst is of higher quality. Our findings highlight the importance of information spillovers on individual performance in knowledge-based industries.

Keywords: information spillovers; knowledge-based industries; analyst performance (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (13)

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